Conflicting Views on Pay It Forward
By Continuing with using this space as an opportunity to work out ideas of Oregon’s Pay It Forward proposal for higher education, I offer two conflicting views of the idea. Dave Dayen at Alternet offers a piece framing the law as a model not only for creatively thinking about solving higher education tuition problems, but also of grassroots democracy:
Dudley presented the Pay It Forward plan to her students, and they loved it. “It has great potential, especially when we’re facing such rising inequality,” Ariel Gruver said. “I know many people who want to go to school, but taking out loans is just not a viable option.”
The class enlisted the Oregon Center for Public Policy to help run the numbers, and brought in several speakers from the governor’s office and the state legislature to hear about the plan. One of them was Rep. Michael Dembrow, the chair of the House Higher Education Committee. He and his colleagues were increasingly aware of the explosion of student debt—“we were hearing it on the doorstep, in town halls,” he told AlterNet—and he wanted to advance legislation to creatively attack the problem. Dembrow proposed that at the end of the quarter the students present their findings and recommendations to a panel of legislators. This presentation became the final exam for the course.
After that, things moved swiftly. The Working Families Party put Pay It Forward at the top of their legislative agenda and began to buttonhole legislators of both parties. Dembrow held hearings on the plan and picked up a bipartisan group of sponsors. “At the first hearing,” says Dembrow, “when the guy from the Economic Opportunity Institute [John Burbank] said the plan derived from the work of Milton Friedman, suddenly the Republicans became more interested.”
After the class ended, the students became activists. They convinced Treasurer Ted Wheeler that his bonding proposal could be used to generate startup costs for Pay It Forward. Then students went to Salem to lobby the legislature. “It was almost surreal, from a student report, to go into lobbying,” said Tracy Gibbs, a class member. “In the first few meetings I just took a lot of notes, but I gained more confidence and it was really fun.”
Other students gave public presentations in their communities to build popular support. Ariel Gruver held one at Portland State with U.S. Senator Jeff Merkley. Speaking about the Pay It Forward plan, Merkley told AlterNet, “This bill is a terrific Oregon-born innovation. We must explore creative ways to make it affordable and realistic for all Americans to attend college.”
Dembrow believes the student advocacy was critical to the bill’s success. “That’s always the best form of advocacy, bringing it to a human level,” he said. “And it was very effective in this case.”
For those who believe in liberalism, this kind of move from class brainstorming to state law is a sort of ideal. The details of implementation remain sketchy though and what we do know doesn’t always make it look like such a great deal for students, which bothers Sara Goldrick-Rab of The Century Foundation. She notes several objections. It only covers tuition and fees, which means students might well have to take out additional loans for room and board. It doesn’t help the parents of students who are also carrying debt, often into retirement. The long-term debt repayment plan will quite possible mean significant interest payments. But I want to note one particular issue:
Oregon is getting a remarkable amount of praise for this plan, and undoubtedly its legislators are thrilled. The plan calls for the state to continue to invest in public higher education going forward, the part of the deal that is arguably most critical. But the real “pay it forward” in the plan is the goal that today’s students will create a “stable funding stream” for tomorrow’s students—relieving the state of the need to do so. Critically, the plan’s authors call it a plan of “shared responsibility.” Given that they are students, it is likely that they mean to imply that the state will do more to participate—but the state in this case may forecast the opposite—a willingness of students to do even more to pay for college themselves.
After all, Oregon has taken steps in recent years towards the privatization of public higher education. The share of general fund monies going to higher education in Oregon declined from 17 percent in 1997 to 5.8 percent in 2009. It is a laggard, falling in the bottom 20 percent of appropriations per FTE. Moreover, Republicans have endeavored to exert less direct financial oversight and administration of public universities in the state by altering the governance structure, which could lead to further cost escalation. But this isn’t unusual these days, as most states seek to justify their disinvestment in higher education and seek ways to take it further. What better evidence that the state could get away with doing even less for students than observing those same students agreeing to cover the costs themselves, out of their future income?
Lest this sound overly cynical, consider the case of Virginia, where the flagship university argued that by doing more itself, state support would increase. In fact, the more financial independence the university took on, the less support it got—students and families pay a larger fraction of college costs in the state than ever before.
The key here is that the Oregon plan requires students to pay their future income back to the state for decades to come—but does not obligate the state to continue its investment. This is unsurprising, since from their inception by economist Milton Friedman these “human capital contracts” have treated higher education as a private good. While the state may not raise the repayment percentage paid by current students, it can certainly increase it for future students—and it will have every incentive to, as long as public objections remain relatively quiet.
In other words, there is a possible dark side of the proposal getting insufficient attention: some Oregon legislators seeking to spend less on higher education may be supporting Pay It Forward in order to simultaneously quell public outrage about student debt, garnering positive media attention and votes, while also increasing the fraction of higher education costs paid by students and families.
There’s a reason Oregon Republicans support this plan after all.
In the end, I am still waffling on this idea. And I think that’s the proper position. Higher education funding is way too complex for any panacea, not to mention one that just came up a few months ago. It reminds me Gilded Age single-issue platforms for fixing everything like Henry George’s Single Tax or Bellamyism. I know we are desperate to fix the problem of student debt. But I want to be pretty bloody sure that an idea doesn’t hurt students in the long run before seeing states go whole hog into passing it.